Next month, the United States Supreme Court will hear oral arguments in the case of Vance v. Ball State University for the purpose of determining whether an employer may be liable under Title VII of the Civil Rights Act of 1964 for the severe or pervasive workplace harassment of an employee by a supervisor having no authority to take formal employment actions against the employee. See 646 F.3d 461(7th Cir. 2011), cert. granted June 25, 2012. This issue has its roots in two 1998 Supreme Court cases that held that an employer may liable under Title VII for the harassing conduct of a “supervisor.” See Faragher v. City of Boca Raton, 524 U.S. 755(1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1996). Faragher and Ellerth, however, did not resolve the definition of “supervisor,” resulting in a sharp division in interpretation amongst the federal circuits. Vance will resolve this division and finally decide whether a “supervisor” can be a person tasked with monitoring the day-to-day activities of employees or if a “supervisor” requires additional authority, specifically the authority to take formal employment actions, such as hiring or firing.

In Vance, the 7th Circuit Court of Appeals held that an employer, Ball State University, could not be liable for the racial harassment and intimidation of an African-American employee caused by the employee’s supervisor and a co-employee because the harassing supervisor lacked the power to make formal employment decisions, such as the power to hire, fire, demote, promote, transfer, or discipline the attorney. In Vance, the employee was routinely subjected to a physically harassing environment by her supervisor, who slapped the employee, made racial epithets, and threatened the employee. The supervisor had the authority to oversee the employee’s day-to-day work but could not make any formal employment decisions. When the employee complained to her employer, the complaints were regularly assigned to a general manager who had also regularly mistreated the employee and never took any disciplinary action. As a result, the employee took legal action and made claims of hostile work environment and retaliation under Title VII.

The District Court dismissed the employee’s Title VII claims on summary judgment based upon the Supreme Court’s 1998 decisions in Faragher and Ellerth, holding that an employer is vicariously liable under Title VII for severe or pervasive workplace harassment by a supervisor of the victim. Under Faragher and Ellerth, however, if the harasser was the victim’s co-employee, the employer is not liable absent proof of negligence. Interpreting Faragher and Ellerth, the Seventh Circuit in Vance held that actionable harassment by a person whom the employer deemed a “supervisor” and who had the authority to direct and oversee the employee’s daily work could not give rise to vicarious liability because the harasser did not also have the power to take formal employment actions against her.

In addition to the Seventh Circuit, the First and Eighth Circuits have held (in addition to the Third and Sixth Circuits in unpublished decisions), that an employer will not be vicariously liable under Title VII for the conduct of its supervisors without the authority to make formal employment decisions. In contrast, the Second, Fourth, and Ninth Circuit (plus the Tenth Circuit in an unpublished decision) have held that an employer may be vicariously liable for the acts of its supervisors who exercise control over the day-to-day activities of employees, but do not have the authority to make formal employment decisions.   Equal Opportunity Commission guidelines support this interpretation of the “supervisor liability rule.” See EEOC Enforcement Guidance: Vicarious Employer Liability for Unlawful Harassment by Supervisors, 1999 WL 33305874 (1999) (stating an individual qualifies as an employee’s supervisor if: “the individual has the authority to undertake or recommend tangible employment decisions affecting the employee; or the individual has authority direct the employee’s daily work activities.”).

The Supreme Court’s resolution of the long-standing circuit split related to the “supervisor liability rule” set forth in Faragher and Ellerth is certain to have a far-reaching impact on employers. If the Supreme Court adopts the broad definition used by the Second, Fourth and Ninth Circuits, and the EEOC, then employers in other circuits, including the Eighth Circuit which encompasses Minnesota, will face much greater exposure for the acts of all employees assigned a supervisory role, likely resulting in more lawsuits against employers. Thus, in clarifying the scope of an employer’s liability for the harassing acts of its supervisors, Vance stands ready to have a significant impact on Minnesota employers.

Oral argument is scheduled for November 26, 2012 with an opinion to be published likely next spring.